The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) have published a new report on the mutual aid sector, putting co-building society on the agenda.
The Mutual Fund Landscape Report released today reinforces regulators’ belief that mutual funds are regulated based on the risks they pose.
As a result, the PRA has today canceled the Building Society Sourcebook (SS20/15).
“The expectations set out in SS20/15 are no longer consistent with the PRA’s wider policy approach and impose prescriptive expectations on building societies that the bank is not subject to,” the report said.
It added that scrapping the sourcebook would “help building societies compete and grow in the UK market and reduce compliance costs for associations”.
The Building Societies Association (BSA) welcomed the report.
A BSA spokesman said: “Regulators have long adopted a one-size-fits-all approach, with rules designed for large diversified banks being applied without adjustment to building societies, despite their lower risk profiles.
“The new ‘strong but simple’ framework goes some way to addressing this imbalance for smaller societies and we welcome today’s concurrent announcement confirming that the Building Society Sourcebook will be discontinued with immediate effect. The Sourcebook is unduly restrictive and anti-competitive for the building society sector. Its removal enables societies to compete on a level playing field with banks while remaining focused on the primary purpose of using members’ savings balances to finance home purchases.”
The application time for new building societies will also be shortened from 15 days to 10 days.
The FCA will establish a mutual aid association development department to provide legislative and policy assistance to mutual aid associations and to help mutual aid associations collaborate to develop their businesses.
FCA chief executive Nikhil Rathi said: “Mutuals are incredibly diverse and rooted in the communities and members they serve. They support people to buy a home, insure against the worst events, improve financial inclusion and bring communities together, whether in clubs, pubs or allotments. We want to help them grow and our new development arm will provide dedicated support. We’ve also accelerated the launch of mutuals.”
Building society mortgage balances rose by £7.5 billion to £493 billion in the six months to September 2025, according to the BSA.
